Frederick’s of Hollywood, Movie Star to merge

FOH Holdings Inc., the parent company of lingerie retailer Frederick’s of Hollywood Inc., and apparel company Movie Star Inc. have agreed to merge.

Movie Star designs, manufactures, imports, markets and distributes women’s intimate apparel to mass merchandisers such as Wal-Mart Stores Inc. and department stores such as Federated Department Stores Inc. in addition to discount retailers, national and regional chains and direct mail catalog marketers.

Under the terms of the deal, Frederick’s shareholders will receive approximately 23.7 million shares of newly issued Movie Star common stock, worth $30.6 million, based on Monday’s closing price of $1.29.

The new company will be called Frederick’s of Hollywood Group Inc.

In addition, Movie Star will issue its non-transferable rights to its shareholders to purchase $20 million in new Movie Star common stock.

The combined company is expected to embark on an accelerated growth plan, including the opening of approximately 50 new Frederick’s of Hollywood stores locations within the next 36 months and the continued expansion of Frederick’s online and catalog businesses.

Frederick’s will continue to operate from its executive offices in Hollywood, CA, with a distribution center in Phoenix. CEO Linda LoRe will continue to lead the Frederick’s business.

Movie Star will continue to operate from its executive offices in New York with a distribution center in Poplarville, MS. CEO Melvyn Knigin will continue to lead the Movie Star business.

The transaction is expected to close in the second quarter of 2007.

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